Category Archives: Credit markets

Tom Adams Discusses AIG CDOs on Bloomberg

Enjoy! Below is a related discussion by Ann Rutledge of R&R Consulting, another structured credit expert:

Alford: Time to Stop Giving the Fed a Free Pass

By Richard Alford, a former economist at the New York Fed. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side. Wide swaths of families, businesses, investors, taxpayers, and others have had not just their net worth but their lives […]

Auerback/Parenteau: Operation Twist, Part Deux?

By Marshall Auerback, a fund manager and investment strategist and Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge, editor of The Richebacher Letter, and a research associate of The Levy Economics Institute Who funds our budget deficit? It is a question taking on increasing significance, given the recent back up on longer-dated bond yields, which […]

Auerback: Greece and the EuroZone: Angie, Ain’t it Time to Say Goodbye?

By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. Arthur Conan Doyle’s literary creation, Sherlock Holmes, once solved a murder by noting the dog that didn’t bark. It doesn’t take Holmes’s ingenuity to see that the plan on offer for Greece is clearly a rescue package which doesn’t rescue. […]

SEC Launches Repo 105 Investigation

The Financial Times reports that the SEC has launched a probe into whether other financial firms used repos to engage in what amounted to financial fraud (as in fraudulent financial reporting), although perilous few are using the “F” word. From the Financial Times: US regulators on Monday asked more than 20 financial groups whether they […]

Tom Adams: Goldman Not Exonerated on CDOs

By Tom Adams, an attorney and former monoline executive Felix Salmon at Reuters and Steve Gandel at Curious Capitalist used some of the analysis in Michael Lewis’s The Big Short as an opportunity to attempt to exonerate Goldman Sachs for the charge of deliberately constructing CDOs to go bad for their own profit. In particular, […]

Greece Rescue = Smoke and Mirrors

It is astonishing that the words “rescue” and “bailout” are being applied to the headfake announced by the EU for Greece last week. Rebecca Wilder at Angry Bear blandly noted, “All I’m saying is that this plan, in its current form, is really not much of a plan at all.” Ed Harrison stressed that voters […]

Quelle Surprise! Insurance Industry Succumbs to Wall Street Product Complexity

Get this: insurance companies have long been very big institutional investors. They get cash from premiums and have to pay it out in the future. If they are in the property and casualty or health insurance business, there isn’t that long a time between premium payments and when the losses might show up, but other […]

JP Morgan, Lehman, UBS Alleged as Conspring to Cheat Municipalities on Investments

Now it is getting closer to being official. This Bloomberg story reports that not only do Wall Street firms screw their clients (hardly a novel revelation these days) but a large group of firms allegedly conspired to price-fix on guarantee investment contracts, a product used by government issuers to park cash raised via bond issues […]

Has Europe put the loaded gun on the table?

A post by Edward Harrison Greek Prime Minister Papandreou asked the European leaders to "put the loaded gun on the table" at this summit i.e. do something concrete to ward off speculators. So they have. The deal which European leaders have now struck is the best we could have hoped for given the political constraints […]

Debunking Michael Lewis’ Subprime Short Hagiography

The current number one non-fiction best seller, Michael Lewis’ The Big Short: Inside the Doomsday Machine, addresses the question “Who got it right? Who saw the real estate market for the black hole it would become, and eventually made billions from that perception?” It is hailed as meeting the usual Lewis high standards of engaging […]

Quelle Surprise! Financial “Innovation” Benefits Innovators, Leads to Product Collapses

Economists are often in the “it works in practice, but does it work in theory?” mode, but here we see a case where some are grappling with why some of their prized notions pre-crisis came a cropper. A clever post at VoxEU discusses why financial innovation isn’t what it is cracked up to be, and […]

Entering a New Mercantilist Era?

While we have enjoyed a period of relative calm after the 2007-2008 financial crisis, the improvement in economic conditions exists in parallel with growing geopolitical tensions. None of the causes of the crisis have been resolved. We still have global imbalances. We still have powerful, predatory, and unconstrained capital markets players firmly in control of […]

Spitzer/Rosner: “Lehman Scandal: Where’s the Follow Up?”

By Eliot Spitzer, former governor of New York who blogs for Slate.com and guest posts on New Deal 2.0, and Josh Rosner, the managing director of an independent financial services research firm It doesn’t take a rocket scientist — and certainly not an accountant — to deduce one thing from the Lehman scandal. The misleading […]

Lehman and the Primary Dealer Credit Facility: Audit the Fed Push Right, Arguments Wrong

The so-called Valukas report on the Lehman bankruptcy has put a harsh light on the final months of the floundering firm and the regulators who stepped up their oversight, in particular, the New York Fed. Some of the NY Fed’s moves have been so indefensible as to in and of themselves warrant full bore investigation. […]